By: Ernst Ducena

Writer, All About Business

There are many factors that can affect one’s life chances, opportunities, and success.  Among many, some often cited factors are education, work ethic, race and sometimes even pure luck.  In addition, recent research has shown there is a strong link between the economic success of parents and that of their children.  A parent’s income, education, asset owning propensity, gifts and expected bequests to their children explain a large part of the economic success of future generations.  The significance of building and transferring wealth is not at all surprising; wealth typically allows for better access to the best education and more influential social circles—factors that help facilitate success.  The suggestion is, then, even before bequests, our success in building wealth significantly affects the economic prospects of future generations.

Before we can expect to see more intergenerational wealth transferring, however, we must first commit ourselves to building our wealth.  According to a study by the Center on Wealth and Philanthropy, in 2001, African American households made up 12.4% of all households in the U.S. but owned only 2.5% of aggregate household wealth.  While African American households have seen growth in wealth from 1992 to 2001, the rate of growth was half of that of all households.

Additionally, there is a wide, and spreading, disparity in wealth between whites and minorities.  This disparity persists even when income is controlled for—on average, blacks have $56,000 less in wealth than their white counterparts with the same or similar income.  The reasons for this include a significant increase in debt among African Americans and persistent discrimination in housing, credit, and labor markets.  Because of the low levels of wealth in the African American community, the study by the Center on Wealth and Philanthropy estimates that, if the current trends continue, by 2055 African Americans will account for less than 2.5% of all wealth transfers, even though African Americans make up close to 13% of the population.

Despite all of this, it is important to keep in mind that these numbers only represent a trend and trends can, and do, frequently change.  Other than policy issues to address discrimination against minority groups, there are many things we can do to help close the wealth gap.  For example African American enrollment and graduation rates have been increasing, and as a result, so has income.  Although increased income does not necessarily lead to increased wealth, increased income, at least, provides increased ability to build wealth.

While continuing to increase our income levels, African Americans should also focus on wealth building strategies, starting with financial literacy.  Sound financial literacy plays an important role in helping to develop good money management practices—the foundation for successful wealth building.  Beyond effective money management, African Americans should also focus on becoming investors and owning assets that appreciate in value.  Although the stock market has given us plenty to be skeptical about following the recent financial crisis, it remains one of the best avenues for owning appreciable assets in the long run.  Getting involved in the stock market can be done in many different ways, from having a brokerage account, owning a retirement plan such as a 401(k), or even a college savings plans.

Although African Americans have many challenges to overcome, some of which may require changes in policy, long-term, intergenerational economic success can be achieved by continuing to shrink the income gap, enhancing our financial literacy, and investing in appreciable assets.  By building and transferring our wealth, we build a foundation for a legacy of success for which future generations will thank us.

Ernst Ducena holds bachelor degrees in French and Psychology and a master’s degree in Psychology.  Upon graduation, Ernst worked as a social services professional before transitioning into the field of financial services.  Ernst currently holds a General Securities Representative (Series 7) license.

Writer, All About Business

I will be a change-agent in bridging the wealth creation gap for African-Americans.  Before the start of my freshman year in college, I found out my father committed credit fraud on my brother and I,  because my father didn’t effectively manage his credit, debt, or budget.  Sadly, this story is told too often in the minority community because we, in the minority community, lack the education and the training necessary to not make this a reality.

The lack of knowledge and exposure to investing among African-Americans represents an emerging national crisis that will add to the already growing financial burdens facing our society.  Research has shown that African-Americans have largely been left out of wealth building opportunities due to a variety of factors, including financial barriers such as high minimum investment requirements, high transaction fees, and high commissions.  I hope to help reduce these barriers so that everyone can participate.

I am dedicated to spending the rest of my life perfecting this craft – providing services that equip minorities with the knowledge needed for economic independence and financial security.  I love working with money, multiplying money, and investing money.  Having grown up in a household where my mother worked tenaciously to provide for my younger brother and me, I realize that there is a vast disparity of opportunity between people who have money and those who do not.  The black community has to think about building adequate nest eggs to carry themselves through old age and to leave for generations to build upon.  We need to learn how to let money make money for us.

Society has shaped me to love the value of the dollar bill.  I realize that money fuels every facet of life from municipal philanthropic endeavors to multibillion dollar conglomerates; money is the lifeblood of it all.  Money breeds opportunities and my vision is to eventually run a company whose services enable families – the Wall Street professionals, the middle-class parents, and especially people who may be unaware of the importance of those services when they first walk through the office doors – to effectively plan for their futures and financial freedom.

Mark Steward is a native of Texas and a humble 2006 graduate of Morehouse College where he obtained his BA in Business Administration with a concentration in Accounting.  Upon graduation he worked for a couple of years as an Investment Banking Analyst in the Financial Institutions Group for JPMorgan Chase based out of New York. Mr. Steward moved back to Dallas, Texas in 2008 and is currently a Reinsurance Financial Analyst for State National Companies.  His customer base includes a wide range of insurers from reinsurance to property & casualty.  Mr. Steward is a President of Toastmaster’s Aegonizers, member of Student Sponsor Partners and math tutor at KIPP Truth Academy.  Mr. Steward also serves on the executive board of the Urban League of Greater Dallas. Since leaving his home state of Texas, Mr. Steward continues his commitment to mentorship wherever he resides.  Regardless of the audience, Mr. Steward’s passion for continuous improvement, whether in finance or community outreach, always manifests itself.

Writer, All About Business

In the 2000s popular news was often published with a relatively negative connotation regarding the “emerging markets” of South America, West Asia, and Africa– Adventurous Investor – New Frontier – Navigating Uncharted
Waters, are the kinds of subject titles that we’ve seen in the past decade. But how risky are these places? It’s
important to first acknowledge that every country has a different investment profile. South Korea is a totally
different market than South Africa, and neither should be grouped into a bucket of risky potential as if they were
roulette layouts.

The African markets in particular are met with the stereotype that they are 1) one large consistent market 2) under
construction. It is true that the fifty-three African countries are not as developed at the fifty United States of
America collectively. But one could drive from Cairo to Cape Town without stopping. It’s been done for decades.
I’ve been evaluating the African continent for the better part of this past decade and my firm has been investing
directly for the past three years with no signs on a downturn prior to or during the American depression of 2007.
Take for instance, South Africa: It is by far the most robust of the African markets. It accounts for 10% of the GDP
from the continent. It commanded approximately 70% of the continents total private equity deals in 2009. It
bolsters the world’s 10th largest exchange, and its currency is one of the most competitively traded.
I don’t think that it is imprudent to recognize South Africa as an ideal investment location, consistent with the
potential of the four BRIC (Brazil, Russia, India, and China) countries. BRICS would be a more accurate coverage of
the global landscape. The realities of a country like South Africa are that they do have what I like to call the tripod
of capitalistic growth. ZA has exceptional physical infrastructure (roads, telecom, and water/sewage) from their
ports to their rapidly growing cities. They have robust legal structure that rivals (from an operational standpoint)
that of the USA and EU, partially because they were given much intellectual assistance after Apartheid was
abolished in 1994. Finally, ZA has a great financial infrastructure. After gold was discovered in the Witwatersrand
the Johannesburg Stock Exchange was founded in 1887. Other than their large national banks, every major foreign
bank is there, including the newly built China Construction Bank.

That is just the tip of the iceberg, or in Mzansi terms the tip of Lions Head. The reality in 2010 is that buy & hold
strategies whether prudent investment philosophy or not, aren’t attractive and actively managed foreign direct
investment is more ideal for people looking to benefit from long-term growth. From this stand-point South Africa
offers the most attractive benefits, globally.

Natural Resources: ZA is arguably the largest mining country on the planet other than China. The benefit is in its
open market philosophy. Information travels fast and well. Unlike China, investors don’t need to partner with the
state to integrate well. Capital markets are not only informative, but liquid.

Timing: Johannesburg and Cape Town are four hours ahead of London and six/seven hours ahead of New
York/Toronto/Brazil depending on day-light savings time. When the US Dollar is low, and the price of metals is
high…South African currency, commodities, and equities are in for a steady incline…companies like Exxaro, Sasol,
Goldfields, etc. will see great growth.

Measurability: No one will likely tell the ambitious 21st century investor that low barriers to entry and trust worthy
information are the most desirable traits in any market. While we should never use the word “predictable” when
referencing the equity markets, because there are always black swans as Nassim Taleb would call them, investors
should be looking for the most measurable market available. In comparison to ZA, the USA is saturated with
companies. Although the JSE has more than four-hundred-seventy listed companies, ten of them carry the trading
weight. A market this sparse is much more than measurable. The idea is to set oneself up as an investor to
capitalize on as many opportunities as possible. 20 years from now, South Africa may be too big to enter, and Peru
may be the most measurable location available, who knows? While riding the N1 from Pretoria to Johannesburg
yesterday I saw the freeway expanding to make more room for everyone – there are no extreme adventures to be
had investing in South Africa in 2010, only very measurable growth.

James Keith is the Chairman and CEO of the Enxit Group: A small global IT Services and Equity Development firm established in late 2007 to deliver the latest technological and financial solutions of the most affluent to disfavored market segments globally. James is an American expat living in South Africa.

5 days to planning your financial future!

“What am I trying to accomplish with my financial life?” “What legacy do I want to leave for those who come after me?” In order to answer such questions you must know the status of your financial life and furthermore, how you’d like to grow your financial life. For some, this can be a rude awakening. For others, it can be an enlightening experience. No matter the emotion revealed, it is critical to understand your financial health, just as it is to understand your physical health. Neglecting either can cause stress and prevent satisfying health and wealth. We’ve been taught that we should have regular check-ups with our healthcare professionals, to stay healthy and live long active lives, but also to prevent life threatening instances. The same practice should apply to your financial health. You should conduct periodic check-ups to attain financial stability and security for your future.

You can start to conduct financial checkups, in five days or less, by following these steps:

DAY ONE: Set goals related to your current financial situation, as well as, goals that represent how you would like to see your finances in the future.

Some people want to get out of debt, make more money, stop living paycheck to paycheck, free-up money for month’s end, and save for retirement or college. Regardless of what it’s for, you must start with a specific goal because without a goal, you don’t know what you’re working towards. Take the day to think about your financial goals, especially as you make financial transactions throughout the day. Do you feel good when you make those purchases? If not, what will make you feel better about making that purchase? Should you be using that money for something else? Should you set goals for your spending? Saving? Retirement? Emergency fund? Insurance? College planning? The answer is YES!

DAY TWO: Write down goals and objectives, in an organized way, and visit them at least once a week.

Some take this simple, yet disciplined, approach for granted, citing frivolous excuses, like, “I forgot” or “I am going to do it tomorrow or when I have more money to work with.” In the end, these are the same excuses that will keep you in the same situation you’re trying to escape. Individuals with goals are more successful than those without goals; individuals with written goals are more successful than those with goals who don’t write them down. In order to accomplish our goals, whether financial or not, we must become disciplined in writing them down, giving them life in some physical form. Some people create vision boards, write on index cards, post-it notes, etc. Whatever the medium, it’s important to take your goals from thoughts to pen and paper.

DAY THREE: Lay it all out on the table! Write down all important information from statements.

Here’s the fun part! You must face your fears and reveal your holistic financial situation. Pulling out ALL statements, letters, and any financial related documents will shed light on the current health of your finances. Note all balances owed, credit available, interest rates and terms, monthly utility bills, monthly income and expenses, due dates and extension dates, insurance policies, will or trust documents, saving and checking account balances, investment account balances, etc. I understand that this may be a daunting experience, especially if you have neglected your financial health, however, rely on faith and find comfort in knowing that you have taken the first step to create a better financial life for yourself. You must see it through if you want to achieve the goals and objectives you wrote down in the previous step.

This day is just like visiting the doctor, which I recently did for an annual check-up. However, its been quite some time since I’ve had a thorough physical check-up. There I was sitting in the office thinking of every little ache and pain, groan and moan I had, worried if my sugar levels were good and if my cholesterol had worsened…if my heartbeat was normal and breathing was steady. I thought of every negative thing and didn’t want to go through it. However, I knew that in the end, the benefit would outweigh the cost. The cost being the anxiety and embarrassment that comes with finding out if my health had worsened. I knew I hadn’t been exercising regularly and eating too many fried foods. At that moment, I wish I hadn’t.

We do the same thing with our finances. We do things we know we shouldn’t, like unnecessary or binge shopping, succumbing to instant gratification and saving little to none of our income. Then, when its time to assess the damage we caused, it’s difficult to endure. Natural, but preventable. By facing your fears and finances, you address your weaknesses head on, learn the status and if its all good, no worries. On the other hand, if it happens to be that one bill you intentionally avoid opening every month, then, take it easy, but OPEN THE ENVELOPE! Leave the emotion at the seal! Look at those numbers, assess the damage and write it down. Then, move on! Don’t dwell in it. There will be plenty of time for that, when we devise a strategy to address the critical financial situations.

Whenever we think of saving, we always think of it with respect to a dollar amount or the present and future values of money or simply how much we’ll have in the bank, with interest compounding daily weekly or monthly, in twelve months. Well, let’s shift our thinking a bit. Let’s instead consider the habits, discipline and values we’re creating by saving. Furthermore, consider who’d benefit from such habits, discipline and values…your kids, siblings, parents, your grandkids and so on.

 NO SAVINGS, NO GOOD!

If you don’t have a specific amount of money in your savings account could it be because of your habits? Americans had a negative savings rate, which means they spent more than their income. For example, Keisha Smith has a credit card, savings and checking account. She has her $500 check directly deposited into her account. She pays her bills and is left with $100. She spends that $100 during the week on food, gas and shopping. She then buys some new furniture using her credit card for $500. Keisha just stepped outside of living within her means. More importantly, she didn’t save any money left from her check and can’t build her savings.  In addition, because she bought furniture on credit, she is without any funds AND has debt over her head that she must pay back over time creating another bill that she can’t afford. She has debt and consequently has a negative savings rate.

CHANGE…OVERRATED OR TOO HARD TO ACHIEVE?

Your spending habits speak volumes about your saving habits. Every time you spend $1.00, you’re losing $0.20 in savings, if you strive to save 20% of your income. Most of us know we’re slacking with respect to saving for various reasons. Some of us, “gotta have it now,” “caught it on sale, ““always get what we want,” “are living paycheck to paycheck,” “don’t have any money to save,” you get my drift? We know that saving more means spending less and that comes with change. Change isn’t easy all the time but it’s necessary.

Just look at what our country is currently experiencing with healthcare reform. During Clinton’s era we attempted healthcare reform, said we desperately needed it, but it didn’t happen. George W. Bush took presidency in 2000 until 2008 and we cried, “Healthcare is a must, it’s too expensive to be healthy and I can’t afford it,” “it sucks”, “we need a change in healthcare.” It didn’t happen. It’s clearly necessary but it didn’t happen. Now, President Obama’s giving it a try and some say the recent election of Senator Scott Brown will prevent healthcare reform. We’ll have to see. My point is that change can be necessary and we can want it but we have to allow it to happen. As much as we want things to be different with our finances we must be ready to act differently and improve or eliminate habits. This change is necessary if we are to see any growth in savings. 

DISCIPLINE IS A MUST

It’s said that it takes 40 days to change or start a habit. Some say it’s 60. Regardless of the number, it will take some time but it’s worth it. You know why? Because you’ll be making changes that will affect your entire life, not just your financial life. Additionally, you would have gained a new sense of discipline that will inspire more discipline and empower you to reach your goals.

Discipline is often underestimated in the process of accomplishing long-term goals or an on-going task, such as saving money or budgeting regularly. However, it’s no foreign idea. We’re disciplined in lots of areas of our lives, such as going to work. We are sure to get up on-time and that we structure our tasks around work hours. Now, understanding this discipline is derived from necessity more than desire, it’s important to highlight the idea of choice. We choose to be on-time and responsible employees, thus we’re disciplined with our approach to getting to work on-time. We can transfer this same idea to other areas of our life, including our health and, just as important, our financial health.

Written By: Dominique’ N. Reese, Financial Planner, Optimum Capital Managmenet

Searching Want Ads

Jobs, jobs, jobs…while the economy seems to be improving, those who have stumbled upon the ranks of the unemployed find little comfort in recent statistics (i.e. three months of US housing price increases). Even though many economists project slightly positive Gross Domestic Product growth in the US  during the third and fourth quarters of 2009,   it will still continue to feel like a recession to millions across this country because the labor market is usually one of the last economic indicators to show improvement in an improving economic environment.  With this country on a course to see a double digit unemployment rate according to many economist estimates, is there any reason to have hope?  The answer is absolutely! 
 
Whenever I discuss financial tips/strategies for the unemployed, many in the audience respond with bewildered looks coupled with a “huh?!”  Or I get the classic oversimplified response which states, “FIND A JOB!”  This is great advice, but there are other financial strategies for those who find themselves unwillingly placed into the ranks of the unemployed. 
 
1.      Get Rid of Foolish Pride – Many people feel that their job is an integral part of their identity.  They take pride in their career and being laid off or fired can be a huge blow to the ego.  I have spoken with many who experience a sense of shame upon finding themselves unemployed.  This shame can lead to medical ailments such as depression or stress.  Going into a shell or becoming the life of the party to mask the reality of your situation from your friends are both very normal occurrences.  Picking up the dinner tab with friends, shopping sprees, and trying to put on the facade that things are still normal is a very destructive and expensive habit. Not only are you using money which should be kept in your savings, but you are depriving yourself of a very important resource…your network. 

Your network of family, friends and acquaintances who can help you find employment is often more expansive than you realize.  Very often your friends and family are more likely to work harder for you to find employment than random strangers who read your resume on websites and with employment agencies.  The more people who know about your situation, the more support you will have from those willing to go the extra mile to provide assistance.  Warm referrals, placing resumes directly into the hands of people who can make hiring decisions, and constantly monitoring the employment scene are more likely to occur by people who care about your future.  In addition, using social networking sites like Linkedin, Facebook, and Myspace can magnify your outreach to others who can assist you in your search. 
   
2.      File for Benefits – There are some unemployed who feel so disillusioned and embarrassed by their situation that they are reluctant to file for unemployment benefits.  However, there are measures in the recent stimulus bill that are designed to help those who have lost their jobs which include:
•         lengthening the period which people can be eligible for unemployment benefits.
•         suspending the taxation of benefits up to $2,400
•         providing a 65% subsidy to cover COBRA health insurance premiums for up to nine months
•         increasing the maximum monthly food-stamp benefit by 13%
 

3.      Join the Ranks of the “Under Employed” – Having “a” job is better than having “no” job.  The mortgage company or your landlord will not stop collecting rent just because you lost your job.  If you find it hard to find a job in your first field of choice, you must begin to look for the next best thing.  There are thousands in my hometown of Detroit who are in this very predicament…they were laid off from the automobile industry and have no other training but that which applies to a suffering industry.  If you can, find a job that will at least help pay bills you can remain above water. While you are working as an “under-employed” individual, consider other options that you might pursue while you are working – options that will expand your scope of career choices and therefore make you more marketable.  For example, community colleges offer inexpensive classes and training, non-profits offer free and inexpensive certification courses (consult your local politicians office for a list of community resources), and the internet has made the new education and training search much easier. Never look at a temporary job as a negative or a step backwards; think of it as a positive event that buys you the time to look for the job of your first choice while allowing you to pay your bills. 

4.      Get CHEAP! – Your pot of funds now has a finite ending and every penny spent gets you one penny closer to that scary ZERO figure! Now is the time to design a budget for your household, tighten your belt, use coupons, buy food in bulk, use only your ATM machine to avoid charges, and eliminate all impulse spending.

Lowering your interest rates can assist in lowering your monthly bills so inquire about lowering your interest rates on your credit cards or your eligibility to refinance your home.  Fannie Mae has reported that up to 50% of individuals who own a loan from Freddie Mac or Fannie Mae and who are eligible for a loan refinance have not taken advantage of the opportunity to get a lower interest rate. 

Here are a few other quick tips that will allow you to cut costs:

• Cut all unnecessary luxury spending that create monthly bills such as cell phone bills (use a house phone and carry two quarters), gym memberships (work out at home), garage parking in the city (park on side streets), and magazine subscriptions (read articles on the internet for free at the library).
• Only take on additional debt in the case of an emergency. 
• Talk to your accountant about researching all legal tax strategies that you can utilize.
• No more loans or money gifts to family members and/or loved ones. 

5.      Make Job Searching a Job – If you are unemployed, your new job is to find a job.  Create an organized database listing all places that have received your resumes, the primary contact person and and an expected date to hear from them.  Rank them in your database according to the likelihood of receiving a yes.  Start your search early in the morning and set as many appointments as possible.  Schedule meetings and appointments on a daily basis since the more time that you spend away from home the more productive you will be and less time will be spent watching daily talk shows. 
6.      Stay Healthy – Even with the 65% COBRA subsidy from the government, maintaining health insurance can be costly.  Whether you elect to maintain health insurance or not (I always advise against going without health insurance) make sure you are taking every precaution to remain healthy. Eat more healthy foods and less junk food.  As we all know, junk food is not only high in calories but it is usually filled with sugar which leads to more costly trips to the dentist.  Work out at least three times per week for a minimum of 30 minutes per day, wash your hands regularly, get plenty of sleep, and take up yoga at home.  Staying healthy is not only good for the body, but it helps to maintain a positive/confident outlook that will make for a more impressive job interview. 

7.      Don’t Touch Your 401K (if you can help it) – Try your best not to have a knee jerk reaction to raid your 401K or company retirement plan.  Keep in mind, just because your statement reads “$50,000” does not mean you have that much to withdraw.  If you consider the federal, state, and perhaps city taxes on the funds that you have invested along with the 10% early withdrawal penalty and the possibility of deducting any matching funds contributed by your company (if you are not fully vested), that $50,000 could easily turn into  $25,000.  Raiding the company retirement plan should be the absolute last option. 

8.      Investing is Not a Priority – If you have other investments, don’t use this as a time to check your portfolio every minute hoping that the $10 stock turns into the next Google.  This is unnecessary stress in your life.  If you were putting funds into an account monthly, those funds should now be diverted into your checking or savings account with the most access.  Liquidity is your best friend in these times of hardship and stocks are not liquid.  Even if you have your funds i n a standard, non-qualified brokerage account you may not have to pay a penalty for the sale of a stock but you have tax liabilities if you have gains.  As with the 401K, stop your investing in these funds, but don’t rush to liquidate these funds at first.  However, if you are forced with the choice between paying rent and keeping a position in a stock, and you have exalted ALL other options, feel free to sell the stock. 

9.      Decide Which Bills to Pay First – After you have exhausted all options, if you are unemployed there may be a time to make hard decisions about which bills take priority.  This should not be determined by which collection agencies are the most annoying or seem to yell the loudest.  If you cannot pay your light bill you may lose your lights.  If you cannot pay your phone bill you may lose your phone.  However, if you cannot pay your rent or mortgage you will lose your home.  Losing your phone or lights might be a tremendous loss, but not as big of a loss as having to sleep on the street.  I am not suggesting that it is okay to skip any bill payment that you owe as this is irresponsible and negatively impacts your credit; however, when hard times are upon us we must keep things in proper perspective. 

Here are a few things to consider BEFORE you decide to skip a bill payment:

• Have you called the companies before to negotiate a payment plan?
• Have you checked your budget and cut all luxury expenditures to see if you can squeeze out a few extra dollars?
• Do you have any items around the home of value that you would consider selling? Is it time to host that yard sale that you have been considering?
 
10.  Don’t Get Suckered – When desperation sits in, financial offers that you would not have considered before now begin to look more attractive. The financial predators are constantly swimming in the waters trying to attract those who are worried, anxious, and concerned that using “traditional” strategies of working hard will not be effective.  These are the commercials that only play during the middle of the day or late at night when the typical employed person will never see them. They offer you overnight fame by purchasing the most effective real estate system ever created or magical options trading software that can never be incorrect.  For a small  fee you will be able to purchase your financial freedom…what a deal!  Your money is too valuable to waste on false notions of fast prosperity.  

11.  Have Faith! – What other choice do you have? Faith is not waiting on a unicorn to prance into your life or a rainbow to form which signifies the end of your misery.  Faith is half believing and half acting on that belief.  People behave according to what they believe will happen.  So if you believe that things will continue to be bleak, your job search will weaken and this will lessen the chances of finding a job.  However, if you believe that your future will be bright, and you hold onto this positive outlook, you will be more likely to do the work that is necessary to find employment.  I promise this to you, if you hold on to the belief that you will find a job, and aggressively pursue that belief, you will survive these hard times!

Once again it’s that time of the year when hopeless romantics everywhere look forward to candlelit dinners, flowers delivered to the office or even a much anticipated marriage proposal. Aside from Christmas it probably is the most wonderful time of the year, but before we let Cupid create our ideal vision of love, we must first ask each other the following questions about the role money plays in maintaining healthy relationships beyond Valentine’s Day.

1. What is your current financial picture and what are your financial goals?
Far too often couples find it easier to discuss how many children they will have, which house to buy and where they will spend retirement without even talking about how they plan to meet those goals financially. College funding, home ownership and retirement are three of the biggest financial decisions any couple will make, but somehow we fail to determine how we will make it happen. Further we choose to hide from our partners outstanding credit card debt, low FICO scores and excessive spending habits instead of having honest conversations with our significant others. Perhaps you want to be “copreneurs” (couples who own businesses together), but like everything else it requires careful planning and consideration.

2. Do you put the pursuit of money above everything else?
I Timothy 6:10 is says: “For the love of money is the root of all evil; which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.” Some have misinterpreted this passage to read Sthat money is evil and that the accumulation of it should be avoided at all costs. But read the scripture carefully – it says the love of money is the root of all evil, not money by itself. In other words, we err in the sight of God when we place money as the most important thing in our live and we love money more than we love God. As a couple you need evaluate that you are not putting material things (which often leads to unnecessary debt) above building your relationship together according to God’s purpose.

3. Are you disciplined enough to maintain a family budget?
My pastor recently called for a six (6) month fast on excessive spending except for absolute necessities. As hard as this will be, the purpose for me is to enforce a sense of discipline and more importantly to recognize God as the true provider of my daily bread. Part of that discipline comes from understanding the difference between need vs. want and sticking to a budget. I am always amazed with reality shows like Bridezillas where brides obsess with spending at least $100,000 on a wedding and aren’t the least bit concerned if the wedding goes over budget. Unfortunately many of these brides and grooms will carry that same mentality into their marriage and their finances and ultimately relationship will suffer as a result.

Now, I’m sure this wasn’t Valentine Day message you were expecting, but sometimes we need to look at more than just being in love, sometimes you need a reality check. Don’t get me wrong I believe in the power of love and desire romance just as much as the next person, but I’ve learned that they key to the success for any relationship is not just about finding chemistry or common interests. It’s also about making responsible decisions as partners, including those related to finances. So, enjoy the chocolates, cozy dinners and tender kisses this Valentine’s Day, but be sure you also make time to have serious conversations about your finances…it just might save you from Heartbreak Hotel.

Given today’s economic challenges, this is not the time to start panicking. Instead we must carefully plan our next financial steps to ride out this storm intact. The steps outlined below are tangible solutions to guide you and your loved ones in making sound financial decisions during this uncertain time. Let one of Optimum’s qualified advisors work with you to start your tomorrow today!

At one time or another we’ve all heard the ominous, monotone and quite frankly annoying tone that typically interrupts our favorite television or radio program to let us know these famous words—”This is a coordinated monthly test of the Emergency Alert System (EAS). If this had been an actual emergency, official messages would have followed the alert tone. This concludes this test of the Emergency Alert System.” We are then returned to our regularly scheduled program already in progress. Like EAS, today’s economic crisis may initially frustrate and confuse us, but we should not panic thinking the world is on the verge of total collapse. Therefore we must heed sound instruction and most importantly use this as a signal to adequately prepare and protect our financial futures.

Rising foreclosures, decreasing values of retirement plans, tight credit lending, plummeting stock markets and bank recovery plans have experts saying we are experiencing our biggest financial emergency test since the Great Depression. But the good news is that all is not lost and we WILL recover if we are patient and diligent enough to ride out the ups and downs of this economic storm.

So How Do I Prepare?

We’ve all heard the advice, “Save for a rainy day” but lately today’s economy makes me wonder if we should be saving for a monsoon! With that being said, preparation is the key to riding out any storm, including economic storms. Most Floridians put together hurricane kits ready at a moment notice with basic survival items just as Californians will have a similar earthquake kit and New Yorkers may have one for adverse winter weather. As a person who rode out several hurricanes and tornadoes, I can attest that being prepared helps calm some of the fear and anxiety that often comes with uncertainty. It gives a sense of peace that at the very least, I know my basic needs will be provided. The same is true for our finances. We can be calm about our financial situation during times like these when we’ve taken the time to plan. Our Economic Survival Kits should include the following:

• Develop a written budget that is enforced and realistic, avoiding large purchases unless absolutely necessary and affordable within the budget.
• Ensure everyone is held accountable for following the household plan.
• Contribute to an Emergency Savings account to cover at least 3-6 months (or more depending on your occupation) of your living expenses in a high-yield savings account.
• Create diversified investment portfolios (i.e. retirement acct) with the proper asset allocation according to your individual risk tolerance and market conditions.
• Consider alternative methods for earning extra income to further increase your savings potential (e.g. selling unwanted items on eBay, consignment stores, yard sales, seasonal employment, etc.).
• Consider barter agreements with neighbors, family and friends for babysitting and other services.
• Maintain adequate life, health, disability and property insurance – now is not the time to drop coverage in order to minimize your expenses.
• Prioritize debt repayment with the goal of being completely debt free.
• Establish estate planning documents such as wills, trusts, living wills, durable power of attorney, etc.
• Don’t forget to continue in your efforts of responsibly “giving” to others who are in need, as we remember the proverb, “Give and it shall be given unto you”.

If you’ve already put together your Economic Survival Kit, Congratulations! You’re well on your way to minimizing your economic collateral damage and today’s economy will test your preparation efforts to sustain your family during financial downturns. But I suspect that most of you are reading this thinking, “I don’t have any of these items prepared for my economic future and I’m doomed for failure.” Not so, as there is still time to start putting these things in place. Even if you are only able to place one item in your Economic Survival Kit, it will go a long way in creating stability during these times. The most critical thing to start doing today is changing your bad financial habits (i.e. using credit card for consumption purposes, not saving) and replacing them with sound financial disciplines that will render the greatest results.
One of Optimum’s qualified representatives will gladly assist you with any questions you may have about how the economy directly affects you. Remember, we are in this economic test together so don’t stress knowing that at some point we will return to regular programming.

If you had a choice of receiving $100,000 toward your retirement or a penny that doubled for 30 years, which would you choose. Most would choose the $100,000 and miss out on a whopping $10.7 million.
Grow Penny Grow
Years Interest Earned Your Balance
1 $0.01 $0.02
2 $0.02 $0.04
3 $0.04 $0.08
4 $0.08 $0.16
5 $0.16 $0.32
10 $5.12 $10.24
15 $163.84 $327.68
20 $5,242.88 $10,485.76
25 $167,772.16 $335,544.32
30 $5,368,708.80 $10,737,417.0

Although financial institutes don’t offer you an annual percentage rate of 100% the above example illustrates the power of compound interest. Compound interest is the concept of earning interest on top of interest. It’s the reason a penny can grow to ten million without another cent being added to the account. Each year the dollar amount of interest earned increases in response to a growing balance. Without compounding, the account would have only gained $0.01 a year and grown to a measly $ 0.30.

Getting a head start on savings will also lower your monthly retirement bill making it easier to fit into your budget. Imagine you discover by using a retirement calculator that you’ll need $500,000 to retire at 65. If you start saving at 25 your monthly commitment would be $78 to achieve your goal, if you wait until your 35 that number increases to $219.* That extra $141 a month could be used to save for a house, pay off debt or take a vacation. What you use the money for is insignificant to the high price you paid for procrastinating.

Now that you’re clear nothing can replace the rewards of starting early, here are three things to remember when socking away money for retirement:

1. Maintain a positive attitude

Don’t look at saving as a burden. Focus on how you’ll feel once you reach your goal and take pride in knowing you are taking the necessary steps to plan for your tomorrow today.

2. Perform checkups

Examine your progress at least twice a year. Make sure your on track to retire at your desired age, verify your money will last and confirm you’ll be able to afford the lifestyle you want during retirement. To help with your examination work with a financial advisor or try one of the free retirement calculators on bankrate.com.

3. Keep a long-term perspective

Sometimes you’ll look at your balance and feel you’ll never reach your goal. You’ll come up with a million and one reasons to withdraw your money. Don’t do it! Remember you can only replace missed time with more money and who’s signing up for that.

We must be proactive in planning our financial future. With the cost of living increases, staggering health care cost and a troubled social security system we must partner with time to accumulate an adequate retirement fund.

To develop a retirement strategy that fits your income level and financial goals contact your Optimum representative today at 877-75-TEACH (83224).